HCL to buy Geometric in $200 million share swap

HCL, which has been heavily dependent on its infrastructure management service business, has been investing in developing the engineering practice.Surabhi Agarwal&Neha Alawadhi | ET Bureau | April 02, 2016, 10:00 IST

NEW DELHI: HCL Technologies will buy most of Geometric in a share swap deal estimated at $200 million, a development which is seen bolstering its engineering and R&D practice.

HCL will issue 10 shares of Rs 2 each to Geometric shareholders for every 43 equity shares of Geometric of Rs 2 each held by them. In total, HCL will issue 15,640,546 shares. The deal excludes the 58% Geometric owns in the joint venture, 3DPLM Software Solutions, with Dassault Systèmes.

GH Rao, the president for engineering and R&D services at HCL Technologies, talked up the "synergies" between the two companies the business line he heads.

Manu Parpia, the CEO and MD of Geometric, pitched the deal as beneficial for customers and employees because they get to enjoy the advantages of working with a larger company in the form of HCL Technologies.

HCL, which has been heavily dependent on its infrastructure management service business, has been investing in developing the engineering practice.

The company’s aggressiveness in this space has led to the segment already contributing over $1 billion revenue in 2014-15.

In the last quarter, engineering and R&D Services contributed 18.6% to the company’s revenue. In 2015, the segment registered a growth rate of 23%.

Geometric has been scouting for a strategic investor for some years and has a “good engineering practice,” said an executive at a leading IT services firm which had considered buying Geometric a year ago.

“Assuming HCL is going big in engineering, it is one attraction,” said the person. “Since they were a niche player with under $200 million in revenues, I think they were better suited in a bigger company.”

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As the Special Chief Secretary & IT Advisor to the Chief Minister - Govt. of Andhra Pradesh, J A Chowdary is all for chasing new growth horizons, pursuing radically different development approaches and outguessing technology trends that will shape the future.

As the Special Chief Secretary & IT Advisor to the Chief Minister - Govt. of Andhra Pradesh, J A Chowdary is all for chasing new growth horizons, pursuing radically different development approaches and outguessing technology trends that will shape the future.